Sensex, Nifty Edge Higher After RBI's Unconventional Rate Cut
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Bengaluru: Indian shares rose marginally on Thursday, tracking gains in broader Asia, after the Reserve Bank of India's (RBI) cut interest rates by an unconventional 35 basis points, highlighting its concerns of a slowing domestic economic growth.
The broader Nifty was up 0.1% at 10,866.75 as of 0407 GMT, while the benchmark BSE Sensex rose 0.11% at 36,741.69.
Asian shares rallied after China limited the fall in the yuan. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.8%.
The RBI repo rate cut to 5.4% on Wednesday also seemed to bring some cheer to investor sentiment in the local markets, which is grappling a slowdown in consumption and a credit squeeze among shadow banks.
"The expected rate cut has happened and there are signs that the regulator is clearing the NBFC (non-banking financial company) mess," said Anand James, chief market strategist at Geojit Financial Services.
"We are coming off global challenges and there are signs of things changing."
IT and auto stocks led gains among sectors.
The Nifty IT index was up about 1%, tracking the stronger dollar, after China's move to set its official yuan midpoint below the key seven to the dollar threshold for the first time since global financial crisis.
The Nifty auto index was up 0.73%, after industry executives met with government officials and sought tax cuts and easier access to funds to revive the ailing sector, which contributes 7% to the country's GDP.
Hero Motocorp rose as much as 5% to 2,629 rupees a share in early trading, its highest in more than five weeks, boosting the index the most.
HCL Technologies shares were also up 3.6%, after the IT services company guided to a constant currency revenue growth of between 14% and 16% for this financial year.
Among losers, Cipla fell 2.8% after the generic drugmaker reported a quarterly profit that missed estimates.